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MEDIA RELEASE: State budget drops to lowest level in 13 years after accounting for inflation and population changes

State budget drops to lowest level in 13 years after accounting for inflation and population changes

A study of North Carolina's General Fund reveals the deep impact of the recession on tax revenues.

RALEIGH (Sep. 16, 2009) -- North Carolina government spending per person has fallen to its lowest rate in 13 years, a report released today finds. This provides further evidence that balancing the state budget using cuts alone was simply an impossible task.

The $4.6 billion state budget shortfall - 22 percent of the state's General Fund for fiscal year 2009-10 - forced state lawmakers into difficult choices. Significant service cuts were enacted, such as deep cuts to mental health services and cuts in funding to local school districts.

Rather than allowing the quality of public services to retreat to such an extent, lawmakers opted to take a balanced approach, filling the budget gap with spending cuts, federal assistance and $1 billion in higher taxes.

Even with this tax increase, however, state appropriations per person have fallen to their lowest level in thirteen years.

Without the tax increases adopted this year, state appropriations per person would have dropped even further, to the lowest level since fiscal year 1992-93.

"Merely scaling back the increase in spending of the past few years would not have been sufficient to cover the budget shortfall," the report from the North Carolina Justice Center's Budget & Tax Center concludes.

The study, "Down in the Valley: General Fund Appropriations Per Person Lowest in 13 Years," examinedinflation-adjusted General Fund appropriations -- the primary portion of the state budget that is funded by income and sales taxes, which pays for education, health and human services, justice, public safety and other public needs - over the past several decades.